TaxTMI 
TaxTMI 
Categorization and Rationalization of Mutual Fund Schemes
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....stics and Type of Scheme (Uniform Description of Schemes): 2.6.1 The Schemes are broadly classified as under: A. Equity Scheme: Mutual Fund scheme predominantly investing in equity and equity related instruments; B. Debt Scheme: Mutual Fund scheme predominantly investing in debt and debt related instruments; C. Hybrid Scheme: Mutual Fund scheme investing in a mix of asset class i.e. equity, debt, InvITs and commodities related instruments as permitted by SEBI. D. Life Cycle Funds E. Other Schemes: i. Fund of Fund Schemes ii. Passive Schemes for e.g. Index Funds / ETFs 2.6.2 'Residual portion' mentioned in the circular refers to the part of a scheme's corpus not invested in its main, core asset classes as provided in the scheme characteristics. 2.6.3 The details of the scheme categories under each of the aforesaid groups along with their characteristics and uniform description are as under: A. Equity Schemes: Sr. No. Category of Schemes Scheme Characteristics Type of scheme (uniform description of scheme) 1 Multi Cap Fund Minimum investment in equity & equity related instruments - 75% of ....
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.... in equity & equity related instruments - 80% of total assets An open ended equity scheme investing in maximum 30 stocks (mention where the scheme intends to focus, viz., multi cap, large cap, mid cap, small cap) 11 Sectoral Fund Minimum investment in equity & equity related instruments of a particular sector - 80% of total assets. An open ended equity scheme investing in __ sector (mention the specific sector) 12 Thematic Fund Minimum investment in equity & equity related instruments of a particular theme- 80% of total assets. A theme may be a combination of two or more sectors. An open ended equity scheme investing in __ theme (mention the specific theme) 13 ELSS - Tax Saver Fund Minimum investment in equity & equity related instruments - 80% of total assets An open ended scheme with attributes in accordance with Equity Linked Saving Scheme, 2005 notified by Ministry of Finance 2.6.3.1 For definition of large cap, mid cap and small cap, clause 2.7 of Master Circular shall be referred. 2.6.3.2 For ESG Funds, para 3.11 of Master Circular shall be referred. 2.6.3.3 In the equity category schemes, Mutual Funds may invest residual portio....
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....ra Short Term Fund Investment in Debt & Money Market instruments such that the Macaulay duration of the portfolio is between 3 months to 6 months An open ended ultra-short term debt scheme investing in instruments such that the Macaulay duration of the portfolio is between 3 months to 6 months 4 Ultra Short to Short Term Fund Investment in Debt & Money Market instruments such that the Macaulay duration of the portfolio is between 6 months to 12 months An open ended debt scheme investing in instruments such that the Macaulay duration of the portfolio is between 6 months to 12 months 5 Money Market Fund Investment in Money Market instruments having maturity up to 1 year An open ended debt scheme investing in money market instruments 6 Short Term Fund Investment in Debt & Money Market instruments such that the Macaulay duration of the portfolio is between 1 year to 3 years An open ended short term debt scheme investing in instruments such that the Macaulay duration of the portfolio is between 1 year to 3 years 7 Medium Term Fund Investment in Debt & Money Market instruments such that the Macaulay duration of the portfolio is between 3....
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....nstruments (including fixed rate instruments converted to floating rate exposures using swaps/derivatives)- 65% of total assets @ An open ended debt scheme predominantly investing in floating rate instruments (including fixed rate instruments converted to floating rate exposures using swaps/derivatives) 17 Sectoral Fund Minimum investment in debt & debt related instruments of a particular sector across duration (only in AA+ and above rated corporate bonds)- 80% of total assets. Sectoral Debt Funds may be launched in following sectors: Financial Services, Energy, Infrastructure, Housing, Real Estate. An open ended debt scheme investing in __ sector (mention the sector) **Provision as mentioned at Paragraph 8.4.5 of Master Circular shall be followed for Uniform cut-off timings for applicability of Net Asset Value in respect of Liquid Fund and Overnight Fund. $ All provisions mentioned at Paragraph 1.13, 8.4.2.1.c, 12.6 of Master Circular in respect of liquid schemes shall be applicable. Concept of Macaulay's Duration shall be explained in the scheme information document. It is clarified that Macaulay duration shall be mentioned at port....
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....0% of total assets; Debt instruments - between 40% and 60% of total assets No Arbitrage would be permitted in this scheme An open ended balanced scheme investing only in equity and debt instruments. No Arbitrage is permitted in this scheme. 3 Aggressive Hybrid Fund Equity & Equity related instruments- between 65% and 80% of total assets; Debt instruments- between 20% 35% of total assets An open ended hybrid scheme investing predominantly in equity and equity related instruments 4 Dynamic Asset Allocation Fund Investment in equity/ debt that is managed dynamically An open ended dynamic asset allocation fund investing in debt and equity instruments only 5 Multi Asset Allocation Invests in at least three asset classes with a minimum allocation of at least 10% each in all three asset classes An open ended scheme investing in __ _,__,__ (mention the three different asset classes) 6 Arbitrage Fund Scheme following arbitrage strategy. Minimum investment in equity & equity related instruments - 65% of total assets. Asset allocation in case of defensive consideration shall be stated in the SID. Exposure in debt instruments sh....
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....ted June 30, 2025 (Annexure C) to AMFI shall be referred. 2.6.5 For easy identification by investors, in order to bring uniformity in names of schemes for a particular category across Mutual Funds and to ensure that schemes remain "true-to-label", the scheme name shall be the same as the scheme category. Words/ phrases that highlight/ emphasize only the return aspect of the scheme shall not be used in the name of the scheme. Further, the 'type of scheme' (mentioned below the scheme name in the offer documents/ advertisements/ marketing material/etc.) should adhere to the description given in the third column of the tables, as applicable. 2.6.6 Clause 1.4.1 of the Master Circular stands deleted. 2.6.7 Pursuant to the issuance of this circular, the nomenclature, investment objective, investment strategy, benchmark and other parameters of each scheme shall be suitably modified (wherever applicable) to bring it in line with the categories of schemes listed above. Such changes shall not be considered as fundamental attribute change. Existing schemes shall comply with the provisions of this circular within 6 months from its date of issuance. 2.6.8 Mutual Funds shall disclo....
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....mon security (ISIN) in Scheme B wi - Market value of security I / Total AUM of the scheme Annexure B Life Cycle Funds An open ended fund with a target date maturity following a glide path investing in a mix of asset classes i.e. Equity, Debt, InvITs, ETCDs, Gold & Silver ETF. 1. Mutual Fund may launch Life Cycle Funds with a minimum tenure of 5 years and a maximum tenure of 30 years. Such fund may be launched for tenures in multiple of 5 years and a maximum of 6 funds by a Mutual Fund can be active for subscription at any given point in time. Additionally, as each fund reaches less than 1 year to maturity, such fund may be merged with nearest maturity Life Cycle Fund with positive consent from the unitholders. 2. Asset Allocation for Life Cycle Funds to be followed in following manner: For Life Cycle Funds with maturity of 30 years Years to Maturity Investment in Equity (%) Investment in Debt (%) Investment in Gold/Silver ETFs/ETCDs/InvITs (%) 15-30 Years 65-95 5-25 0-10 10-15 Years 65-80 5-25 0-10 5-10 Years 50-65 5-25 0-10 3-5 Years 35-50 25-50 0-10 1-3 Years 20-35 25-65** 0-10 <....
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..... In order to inculcate financial discipline, in life cycle funds, an exit load of 3% would be chargeable on any exit by an investor within one year of investment; an exit load of 2% within first two years of investment and 1% in the first three years of investment. 4. Life Cycle Funds shall follow benchmark framework as prescribed for Multi Asset Allocation Fund. 5. Life Cycle Funds shall include the maturity date in the nomenclature of the scheme, for e.g. Life Cycle Fund 2055, Life Cycle Fund 2045 etc. Annexure C Standardized Framework for Fund of Fund (FoF) Schemes Applicability- The captioned framework is applicable for all Fund of Fund Schemes having more than one underlying funds. CATEGORISATION OF FUND OF FUND SCHEMES (with multiple underlying Funds) AMCs may launch FOFs with multiple underlying funds under the following broad categories: S.no. Category of FOF Sub-Category Description 1. Equity oriented FOF (Domestic) Diversified FOF FOFs that invests in schemes which are based on varied market caps e.g. large-cap, mid-cap, Nifty 100, Nifty 50 etc are allowed under this sub-category and these underlying schemes should not be base....
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....bt markets of a particular country Region specific Debt FoF^2 FOFs investing in overseas debt oriented schemes that provides exposure to the debt markets of a particular region 6. Domestic and Overseas FOF^1 Diversified Equity FOF FOFs investing in domestic and overseas equity oriented schemes which should not be based on the factors like momentum, quality, etc. Minimum investment in underlying domestic and overseas schemes should be at least 35% each. Sectoral /Thematic based Equity FOF FoF investing in domestic and overseas equity schemes based on • a single sector; or • a single theme; or • Multi-sector. Minimum investment in underlying domestic and overseas schemes should be at least 35% each. Debt oriented FOF FOFs investing in domestic and overseas debt oriented schemes. Minimum investment in underlying domestic and overseas schemes should be at least 35% each Note: 1. W.r.t Overseas FoFs, the AMC to take into account certain parameters such as liquidity in such overseas funds, a certain threshold of collective AUM following the overseas indices of such overseas funds, compliance of such....
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....that category/sub-category as mentioned in Annexure III: a) The AMC may merge the existing FoF schemes falling under a category/sub-category to reduce the number of FoFs under that category/sub-category in compliance with relevant SEBI MF Regulations/ Circulars issued thereunder; b) If the AMC is somehow not able to merge existing FoFs falling under a category/sub-category due to scheme features, investment objective, etc., then such existing FoF schemes may be grandfathered from the requirement of restricted number of FOFs in particular category/sub-category based on request and rationale received from the concerned AMC. Further AMCs while making the request for grandfathering for overseas FOF category of schemes may also include distinct terminology in the scheme name for the purpose of providing more clarity to the unitholders, such distinct term may include US Treasury 1-3 year, NASDAQ, etc. Annexure- I Sr.No. Name of Regions 1 ASEAN 2 Europe 3 Asia 4 Asia Pacific 5 Africa 6 Middle East 7 North America 8 South America 9 Oceania/Australia ============= Document 1 Annexure- Il S.No.....
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.... mentioned hereinabove. Multi Asset Allocation FoF Multi Asset- As per the policy framework for composition of benchmark of multi asset allocation fund category Commodity based FoF(Domestic) Gold + Silver (or any other allowed Commodities) Weightages of these benchmarks should be at least the minimum of the investment range of that particular underlying fund. 5 Overseas FOF Benchmark of the underlying overseas MF schemes or broad market benchmark or weightages of these benchmarks should be at least the minimum of the investment range/duration/credit profile of that particular overseas underlying fund as per the SID. 6 Domestic and Overseas FOF Benchmark of the underlying overseas MF schemes or broad market benchmark or weightages of these benchmarks should be at least the minimum of the investment range/duration/credit profile of that particular overseas underlying fund as per the SID. Annesure-18 S. No. Type of FoF Available Proposed Name Active option Passive option Active and Passive option - Equity oriented FOF(Domestic) · Diversified FOF > Diversified Equity > Active FOF If the investment in the underlying schemes is across upto 2 caps i.e. large....
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.... or flexicap+multicap, then name of the underlying caps i.e. large +midcap or flexicap+multicap will be used. However, if the investment in the underlying schemes is across more than 2 caps than the word "al cap" will be used. > domestic and overseas diversified equity >Passive FOF > domestic and overseas diversified equity Omni FOF If the investment in the underlying schemes is across upto 2 caps ie, large +midcap or flexicap+multicap, then name of the underlying caps in. large +midcap or flexicap-multicap wil be used. However, if the investment in the underlying schemes is across more than 2 caps than the word "all cap" will be used. . Sectoral /Thematic based Equity FOF domestic and overseas > Passive FOF domestic and overseas > Omni FOF Debt oriented FOF Based an single debt category - diversified debt Bored on single debt category - >Passive FOF or Based on diversified debt category - Based on single debt cotegary - Omni FOF For Example : Distinct Keyword could be ' Short Duration + Credit Risk, "Overnight+Liquid', etc. Annexure- IV S. No. Type of FoF Number of FoFs permitted to be launched by an AMC Active option Passive option Active and Passive option 1....